EVR Cargo to decide about future of Russian freight car business in August ({{commentsTotal}})

EVR Cargo freight train.
EVR Cargo freight train. Source: (Wikimedia Commons)

State-owned EVR Cargo’s supervisory board decided on Thursday to postpone the decision whether or not to go ahead with its management’s plan to invest €35 million in new rolling stock that would then be leased to companies in the Russian transit business.

The plan was to exploit an opening in Russia’s railway transit market created by a government decree that phased out 200,000 obsolete freight cars, and in effect triggered a price hike in the leasing of rolling stock to companies.

According to the plan, EVR Cargo would have bought 600 container flatcars and open freight wagons and leased them to transit companies.

The plan attracted plenty of criticism, both because of its perceived risk as well as the fact that so far no private investors were involved in it. Former minister of economic affairs, Kristen Michal (Reform), as well as various executives called the plan a dangerous gamble.

The Ministry of Economic Affairs and Communications has been supportive rather than critical, with deputy secretary for transport, Ahti Kuningas, as well as Minister of Economic Affairs Kadri Simson (Center) pointing to an upcoming further assessment of the risks involved by EVR Cargo’s supervisory board.

Neeme Jõgi, the board’s chairman, said on Wednesday that they would need more information before being able to make a decision. After its meeting on Thursday, the board announced that they were postponing the decision until August. The amount of information to be examined was too great to get to a quick decision, Jõgi said.

The company has already signed an agreement with a Russian manufacturer over the purchase of 300 container flatcars and 200 open freight wagons worth €17.8 million. This investment represents the initial part of a total of €35 million to be spent on new rolling stock.

Simson said on Wednesday that a lot was being done to alleviate the risks involved. For example, to avoid risks connected with the Russian currency, deals would be signed with EU companies in euros, and not in roubles.

EVR Cargo is state owned and mainly deals with transportation, the repair of rolling stock, and leasing rolling stock to operators. Recently its leasing revenue has increased, representing an increasingly interesting business direction the management of the company wants to exploit.

After a loss of €1.8 million in 2015, the company’s new management was at a minus of €189,000 in 2016. There have been discussions about taking EVR Cargo public, a scenario that is unlikely as long as the company’s results don’t justify selling its stock publicly.

Editor: Dario Cavegn



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